Govt promises 17 percent returns on equity investment

KATHMANDU. Investors of hydropower projects in Nepal can earn a maximum 17 percent return on equity investments. The new energy rate announced by Minister for Energy Janardan Sharma on Monday is calculated on the basis of 17 percent return on investment, according to the energy ministry officials.

This is the first time that the government has announced return on equity investments in hydropower projects, changing the existing flat rate of Rs 4.80 per unit in wet season and Rs 8.40 per unit for projects with up to 100 MW capacity, and the rate determined by Nepal Electricity Authority (NEA) on case to case basis.

Until 2009, NEA used to calculate internal rate of return of 16 percent. But the practice ended after it increased energy rates by 20 percent to Rs 4.8 per unit for energy in the wet season and Rs 8.4 per unit for dry season without conducting any economic analysis.

The government has offered separate rates for reservoir type projects and peaking run of river projects. Minister Sharma announced that NEA will pay Rs 12.40 per unit energy for energy generated by reservoir type plants from December 1 to May 30 and Rs 7.10 per unit from June 1 to November 30. The rate, however, is applicable only if the project is generating at least 50 percent of its installed capacity.

Likewise, the PPA rate for Peaking Run of River – the projects that can reserve water during off-peak hour and generate in peak-hour – has been set at Rs 10.55 per unit (for a minimum four hours of peaking) for six months from November 1 to May 30. Similarly, the rate for wet season (June 1 to November 30) has been set at Rs 4.80 per unit.

Similarly, the government has extended wet season from four to six months for peaking run of river projects. This means the producers will be paid more.

Chiranjivi Chataut, a joint secretary at the Ministry of Energy, said the new energy rates might encourage independent power producers (IPPs) to build peaking projects. IPPs so far have been focusing on run of river projects only. Power generation by these projects drops significantly during dry months.

Likewise, energy price for multipurpose reservoir projects has been set at Rs 10.01 per unit based on 55 percent energy of dry months and 45 percent energy generated in wet months.

Hydropower investment portal launched
The Ministry on Monday launched a portal to facilitate individuals and firms interested to invest in hydropower projects in Nepal.

Interested firms and individuals, including migrant workers and non-resident Nepalis, can sign in on a new portal —, Minister for Energy Janardan Sharma said at a press meet on Monday.

The government will showcase attractive projects along with the rate of return to the investors who sign up in the portal. Such investors can make investment commitment by filling up a form and declaring the amount to invest in hydropower projects, according to energy ministry officials.

10th Jan 2017, 11.00, My Republica

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